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of controlling the economy in this kind of a very volatile inflationary environment that had appeared in 1979. and so, the change was to go to strict targeting on the money supply alone. the effect of that is, if you're not paying any attention to the price of money -- which is what interest rates are -- the effect of targeting entirely on the supply is that the price of money is going to change a good deal more. schoumacher: by the end of the year, interest rates began to rise, and rise dramatically. by february, the prime rate had reached a record 20%. among the first to feel the squeeze were small businessmen. we understand what the objective of the national government is, what the objective of the fed is, but we think that what can be a cure for the country's ills can be fatal to the small businessman. schoumacher: the carter administration reacted to the sky-high rates by imposing a limit on the amount of credit banks could offer. suddenly, the buying spree ended, and the fed was pulled off-course. they were forced to expand the money supply to rescue the plummeting economy. but in late
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